Gold Price Forecast: XAU/USD recovers some lost ground below the mid-$2,000s

Gold price (XAU/USD) recovers some lost ground below the mid-$2,000s during the early Asian session on Tuesday. The possibility that the US Federal Reserve (Fed) might extend its restrictive stance for longer might exert some selling pressure on the yellow metal in the near term. However, gold traders will take more cues from the US Consumer Price Index (CPI) on Thursday for fresh impetus. The gold price currently trades near $2,030, 0.14% on the day.

Meanwhile, the US Dollar Index (DXY), a measure of the value of the USD against a weighted basket of currencies used by US trade partners, hovers around 102.28 after facing a rejection from a multi-week high of 103.10. The Treasury yields edge lower, with the 10-year yield standing at 4.02%.

The FOMC minutes and the December Nonfarm Payrolls report show monetary policy caution is still needed. The market anticipates that the US economy will remain robust in the fourth quarter (Q4) and in 2024, which certainly wouldn’t require five to six rate cuts from the Fed this year. This, in turn, might boost the US Dollar (USD) and cap the upside for the USD-denominated gold.